Israel unveiled plans on Monday for a new settlement in annexed east Jerusalem, triggering warnings from several foreign governments that it could hamper efforts to restart faltering peace talks.
The project for 400 homes in the mainly Arab eastern part of the city was announced by the Jerusalem authorities on the heels of plans to build hundreds of new housing units in a settlement in the occupied West Bank.
"It is a scandalous decision," charged Yariv Oppenheimer of the anti-settlement movement Peace Now, warning that it would "affect negotiations with Palestinians even more."
The Palestinians themselves have said Israel's settlement activity would shatter efforts to relaunch the peace process that has been largely stagnant since it was revived in late November.
But Israel's staunch ally the United States stopped short of criticising the latest settlement plans, although it has expressed concern about such construction in the past.
However, the governments in Egypt and Jordan - the only two Arab states to have signed peace treaties with Israel - lashed out at the latest project for occupied east Jerusalem.
Germany also issued a strongly worded condemnation.
"The government believes that pursuing settlements in the West Bank and east Jerusalem at this point in time is unacceptable. We see it as posing a potential danger to the peace process," foreign ministry spokesman Martin Jaeger said.
"Settlement activity places a question mark over the viability and continuity of a future Palestinian state and therefore the international community has taken a clear, unambiguous position on this matter," he said.
Settlement activity on occupied Palestinian territory has been one of the main stumbling blocks in faltering Middle East peace talks that were revived under US auspices in November but have made little headway since.
And Egyptian foreign ministry spokesman Hossam Zaki called on the international sponsors of the peace process to pressure Israel to reverse the decision.
"It flies in the face of political dialogue between Palestinians and Israelis," he said.
"The expansion of Israeli settlements, which is contrary to international law and UN resolutions, undermines the opportunities for achieving a just peace."
Israel occupied and annexed east Jerusalem following the 1967 Arab-Israeli war and declared it its "eternal, undivided" capital, a claim not recognised by the international community.
On Sunday, Israel announced plans to expand the settlement of Givat Zeev between Ramallah and Jerusalem by as many as 750 new housing units.
"I know we have raised this with the Israelis. We've expressed some concern about this," US State Department spokesman Sean McCormack said, apparently referring to past settlement plans and their impact on the peace process.
Secretary of State Condoleezza Rice, who visited the region last week in a bid to prevent the peace process from being derailed by an upsurge in violence, was due to hold talks Monday with Israeli Foreign Minister Tzipi Livni.
In Jordan, King Abdullah II told visiting Palestinian president Mahmud Abbas that he "rejects Israel's unilateral measures, particularly expanding settlements," according to the royal palace.
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